Avista Corporation

Welcome to the Avista Corporation Second Quarter 2019 Earnings Conference Call. My name is Hilda, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star, then 1 on your touchtone phone. Please note that this conference is being recorded. I will now turn the call over to Mr. John Wilcox. Mr. Wilcox, you may begin.

Thanks, Hilda. Good morning, everyone, and welcome to Avista's second quarter 2019 earnings conference call. Our earnings were released pre-market this morning and are available on our website. Joining me this morning are Avista Corp. Chairman of the Board and CEO, Scott Morris, Avista Corp. President, Dennis Vermillion, Senior Vice President and CFO, Mark Feast, Vice President, External Affairs and Chief Customer Officer Kevin Christie, and Vice President and Controller Ryan Crassel. I would like to remind everyone that some of the statements that will be made today are forward-looking statements that involve assumptions, risks, and uncertainties which are subject to change. For reference to the various factors which could cause actual results to differ materially from those discussed in today's call, please refer to our 10-K for 2018 and 10-Q for the second quarter of 2019, which are available on our website. To begin this presentation, I would like to recap the financial results presented in today's press release. Our consolidated earnings for the second quarter of 2019 were $0.38 per diluted share, compared to $0.39 for the second quarter of 2018. For the year to date, consolidated earnings were $2.14 per diluted share for 2019, compared to $1.22 last year. Now I'll turn this session over to Scott.

Well, thank you, John. And good morning, everyone. As we have previously announced, I will be retiring effective March 1 2020. And Dennis Vermillion will be taking over as CEO on October 1 2019. I've been honored to lead this company and serve alongside exceptional and dedicated employees for nearly 40 years. I'm incredibly proud of what we've accomplished together and look forward to continuing my service on the Avista board as this company continues to achieve great outcomes for those it serves. We've been diligent and deliberate in the succession planning of our company over the years, and I have every confidence in Dennis as the next CEO and his ability to successfully lead Avista into the future. Dennis has clearly demonstrated his commitment to this company and his deep leadership experience and extensive expertise in all aspects of the company positions him well to shape the next evolution of the company. Earlier this year, we were proud to celebrate Avista's 130th birthday. To mark this historic event, Avista made a commitment of $7 million to fund initiatives that strengthen our local communities. This major philanthropic contribution is the latest example of Avista's long rich tradition of championing the communities we serve. For decades, we've worked side by side with our community members to make the places where we live better, stronger, and more resilient. We'll infuse $7 million into our communities over the next three years. It's earmarked to focus on three initiatives. First, homelessness. We know communities both large and small face this complex issue, and VISTA wants to help find solutions. Second, small-town pride. We want to strengthen communities by solving tough problems, building resilience, and continuing to care for our neighbors. And third, youth success. We recognize that today's youth face many challenges. That's why we're investing in initiatives that will set our youth on an exciting path for their future. We know that we can accomplish great things when we partner with each other, and I'm really excited about the possibilities. With regards to our quarterly earnings, We had a strong second quarter as our earnings benefited from lower operating costs and better-than-expected customer growth. These increases were partially offset by the donation commitment I just spoke about. AEL&P was slightly above our expectations and expected to meet our four-year guidance. At our other businesses, we completed the sale of our subsidiary, Metal FX, in the second quarter, which resulted in about a $2.3 million gain, and we also had earnings from some of our other investments. Regarding regulatory matters, in July, we were able to reach an all-party settlement in principle for the remaining issues of our natural gas general rate case in Oregon, and we expect to file this agreement later in August. In June, we filed an electric general rate case in Idaho, and we continue to work through the regulatory process in Washington. We expect these cases to provide rate relief in early 2020 and begin reducing the regulatory lag that we've been experiencing. Based on the 2019 results to date, for the full year of 2019, we are raising our earnings guidance by $0.05 per diluted share to a consolidated range of $2.83 to $3.03 per diluted share. This includes $1.01 per diluted share for the termination fee received from Hydro One in the first quarter, which was partially offset by the payment of remaining transaction costs. We're raising earnings guidance due to the gain of the sale of Metal FX and earnings from investments at our other businesses. And now I'm going to turn it over to Mark.